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U.S. Crackdown on Pay Violations Yields $240.8 Million in Wage Recoveries

Monday, March 02, 2015

U.S. labor investigators recovered $240.8 million in back wages for American workers last year amid an intensified crackdown on pay abuses in low-skill industries. That newly released total – which reflects the amount of back wages that employers agreed to pay, or were ordered to pay, following government investigations – amounted to $890 per affected worker. However, a recent report prepared for the Labor Department suggests that the back wage recoveries only scratch the surface of what underpaid workers actually are owed. The report by Eastern Research Group, issued in December, estimated that in California and New York alone, minimum wage violations in 2011 cost workers at least $32.7 million a week—or about $1.7 billion a year. At least 50,000 families in the two states suffered income losses due to minimum wage violations, and at least 14,800 families were brought below the poverty level, the report found.

It also estimated that minimum wage violations led to the loss of about $373 million in U.S. and state income taxes and other payroll taxes. David Weil, an economics professor and labor market expert who took over as administrator of the Labor Department’s Wage and Hour Division last May, said in an interview that his unit is increasingly targeting industries prone to pay violations largely because agency resources “are always going to be limited.” “We oversee 7.3 million workplaces. We have just a little bit over 1,000 investigators. So our efforts have been for a number of years now to really focus those resources on the industries, the workplaces and the workers where the largest problems lie.” Judy Conti, a lobbyist for the National Employment Law Project, which advocates for low-wage and unemployed workers, lauded the Wage and Hour Division’s current strategy. She said targeting abusive industries instead of relying heavily on worker complaints is important because many of the most vulnerable workers are afraid to complain. “Though there are protections against retaliation in federal law, those often take a long time to remedy and enforce,” Conti said. “And low-wage workers whose financial security is so precarious really don’t have the luxury to stand up for what’s right and complain when their legal rights are being abused because they can’t risk losing even the tenuous foothold on the economic ladder that they have.” (click on link to read full story)